Hong Kong legislator Dr. Johnny Ng

AsianFin -- Hong Kong legislator Dr. Johnny Ng sees decentralized physical infrastructure networks (DePIN) as a transformative tool that lowers entry barriers for new users and accelerates the adoption of emerging technologies, particularly artificial intelligence (AI).

Speaking at the DePIN Expo 2025 in Hong Kong on August 27–28, Ng noted that DePIN could help push innovative products to market in months rather than years, while also enhancing Hong Kong’s positioning as a Web3 hub.

“DePIN is a very good application because it reduces costs for new entrants and speeds up the rollout of new business models,” Ng said in an interview with Barron’s, AsianFin, and ChainDD. “When combined with AI, it provides an even stronger driver for innovation, making it easier for both consumers and small businesses to access new opportunities.”

Ng noted that the technology’s real-world impact could be felt quickly in retail and consumer services. By reshaping business models and shortening return cycles, DePIN-enabled products could reduce costs for operators while giving consumers more affordable choices. “Ordinary citizens care about whether new technology makes life easier, cheaper, and more diverse,” he said. “DePIN can deliver these benefits directly.”

Ng emphasized that Hong Kong’s regulatory landscape will be critical to the long-term development of digital assets. He noted that the city’s stablecoin framework, modeled on banking and stored-value payment regulations, is intentionally strict.

Licenses will be issued on a very limited basis, with as few as one expected early next year. Moreover, he stressed, any licensed issuer must also comply with the legal regimes of the markets where their stablecoins are deployed.

In addition, the Legislative Council plans to move forward with laws regulating over-the-counter (OTC) token transactions as early as 2025, to strengthen safeguards against financial risks. “The government’s principle is clear—same risk, same regulation,” Ng said.

Ng emphasized that data assets, including Bitcoin, are increasingly being treated as strategic reserves by governments and companies worldwide. “If you move too slowly, the cost of catching up will only rise,” he warned, drawing a parallel to the way countries historically stockpiled gold.

Looking ahead, Ng said Hong Kong holds unique advantages for Web3 development—no foreign exchange controls, low taxes, and proximity to mainland China’s 1.4 billion consumers. “With the Greater Bay Area and the Belt and Road Initiative, Hong Kong is in a natural position to thrive in the next wave of digital innovation,” he said.

The interview transcript is as follows, edited for clarity and brevity:

1. In recent years, DePIN has become an important track in the Web3 field. Through token incentives, it mobilizes real-world physical resources and human labor, covering multiple areas such as wireless networks, energy, and data storage. How do you view the development potential of DePIN? What specific policy ideas or advantages does Hong Kong have in promoting the implementation of DePIN technology and projects?

Ng: What we mainly focus on are several directions. One is regulatory ordinances. We have successively enacted several laws, hoping that under the Greater Bay Area’s cultural and economic model, there will be a more compliant, safer, and more stable system development direction.

And DePIN is actually a very good application, because we know that traditional economies require different kinds of infrastructure. Generally speaking, the startup cost is relatively high, and for some new users, the threshold may be somewhat high. So DePIN, combined with the entire decentralized ecosystem, can bring out some new business models more quickly.

We see many AI products, many new retail products, and so on. DePIN is also a very beneficial and promising development direction in them, especially in Hong Kong. As everyone knows, Hong Kong is a commercial center, and many new things are easily accepted here. Here, bringing in these new things from traditional industries, I think, is an accelerator. Something that might normally take one or two years to become widespread could, with the appearance of DePIN, become popular within three months or half a year. So this is a very good opportunity.

2. The theme of this conference is “Life, Reimagined with DePIN.” Compared to grand visions, citizens care more about concrete applications. Could you share one or two DePIN application scenarios that you think could be implemented in Hong Kong the fastest, allowing ordinary citizens to tangibly feel convenience or even a transformation of their lifestyle?

Ng: Right. Actually, for ordinary people, what they care about is: when something new comes out, what does it have to do with me? Does it make my life more convenient, give me more enjoyment, more diversity, perhaps lower costs? These are the things that citizens care about. At the venue, I saw some products, and quite a few of them were aimed at citizens, allowing them to truly experience the benefits. For example, I saw some retail products. After using DePIN, they can change the entire business model, reduce the payback cycle, which is certainly a good thing for operators. For citizens, the cost will be lower and there will be more choices. These are real benefits that we consumers can tangibly gain.

In addition, I also saw some integrations with AI. I think DePIN is a very good tool to promote the combination of products with artificial intelligence. This is also something we see as having very large potential space in the future for ordinary people, whether individuals or SMEs, to find new growth highlights.

3. The essence of DePIN projects is the deep integration of the “blockchain token economy” with “physical hardware infrastructure.” This will inevitably impact traditional regulatory frameworks such as industry licensing, cross-border data, and device certification. As a Legislative Council member, what do you think is the biggest legal obstacle at present?

Ng: I think that in terms of hardware development, from a legal perspective there are no major problems. It actually does not need much regulation, nor does it need licensing. But within the token ecosystem — including token issuance, token circulation, token custody — there are some financial risks.

So from the legislative perspective, we have already enacted several laws, including anti-money laundering, a licensing regime for centralized exchanges, tokenization service providers, and stablecoins. According to reports, early next year we may also issue one license, so all of these are okay.

There is also another law, because token sales may possibly be conducted through some offline OTC. We are currently consulting on this, and this week the consultation will conclude. It is expected that next year the Legislative Council will quickly initiate the legislative process. Hopefully, next year this law can also be enacted, so that some retail currency-exchange-type shops can be regulated. So in the future, the entire ecosystem will become increasingly complete.

The Hong Kong government’s overall attitude is: the same risk, the same business, use the same regulatory approach. Overall, I think it is still promoting the development of the entire industry in a relatively orderly way, including DePIN.

4. You once proposed studying the possibility of including Bitcoin in Hong Kong’s strategic reserves. What strategic considerations was this idea based on?

Ng: Data assets have already become an inevitable trend. Major countries, including the United States, some large enterprises, and some small and medium-sized countries, have already incorporated data assets, including Bitcoin, into their national reserves. I think once this trend emerges, it is possible that other countries will follow suit. If you are slower in doing so, the cost of competition later will only become higher. This was the main consideration, so at the time I also made the proposal.

Of course, the Hong Kong government did not respond very positively, but I also feel that since I am a Legislative Council member, I must share, through my channels, some of the problems I see and some of the trends happening in the world. Not limited to Hong Kong (China), but all sovereign states in the world have to face the same issue.

It is like gold a hundred years ago — other countries also had to hold gold reserves. Gold is an asset that has been recognized for hundreds or even thousands of years as something of value. In addition to their own fiat currency, countries also hold some gold. Bitcoin is also considered by many as a reserve, and it is something that every country has to study.

5. The Hong Kong “Stablecoin Ordinance” has officially come into effect. What do you think is the most important innovation of this ordinance?

Ng: Hong Kong’s stablecoin ordinance mainly combines two existing ordinances: the Banking Ordinance and the Stored Value Facilities Ordinance. Of course, it is not the same as our banks or stored value facilities, because it is cross-border and involves many cross-border scenarios. The previous ones were mostly local, easier to manage, but this one is cross-border.

So the entire ordinance has two main ideas: one is safety, which is particularly important; the other is the protection of customer assets, because our ordinance requires issuers to separate their own assets from customer assets, to ensure security. These are the overall guiding ideas of the ordinance.

I think one of the features is that we do not restrict which currency it must be pegged to. It can be the Hong Kong dollar or other countries’ currencies. Of course, you also must comply with the laws of other countries. If another country requires you to also obtain a license locally, then you must do so. Otherwise, Hong Kong will not agree either. Hong Kong is responsibly enacting this law and responsibly managing the ecosystem for stablecoins in the future. I believe this is also an inevitable trend. So for other countries, Hong Kong’s ordinance is also a relatively high-reference-value piece of legislation.

6. In your view, what specific conditions are needed to issue a stablecoin pegged to offshore RMB?

Ng: Hong Kong’s ordinance is very strict, and the number of licenses issued will be very small. By the time licenses are issued, whether it is the application scenario, financial strength, and so on, all must comply with the legal requirements of the country where the application lands. So we don’t need to discuss which currency, because at that time, actually any currency can be issued, as long as it meets the conditions I just mentioned.

7. In addition to stablecoins, Hong Kong is also promoting the licensing regime for virtual asset trading platforms. How do you view the synergy between stablecoin regulation and the overall regulatory framework for virtual assets?

Ng: I think each law and each piece of content is one piece of the puzzle. When put together, the whole picture is complete. I believe that once everything is fully connected, the entire ecosystem, including DePIN, will also be more confident. The soil will be better, allowing each of our “trees” to grow. That is the vision I like for the future.

8. In your view, what are the key opportunities and main challenges for Hong Kong’s Web3 ecosystem development in the next three to five years?

Ng: Now every country is striving to develop its own Web3 industry. For Hong Kong to stay ahead, it still needs the government, the industry, and different talents to come to Hong Kong and work hard together — only then is there a chance of success. Our opportunities are not small either, because Hong Kong is a Special Administrative Region of China. “One country, two systems” ensures Hong Kong’s prosperity and stability, and also ensures that we remain an international financial center. This status as an international financial center is very important for the development of Web3.

First, we have no foreign exchange controls. All money coming in and out, as long as it is legal and compliant, is completely free. Any fiat currency is fine. Second, Hong Kong’s tax is very low, and compared to many countries it is very competitive. Most importantly, we are also backed by a large country with 1.4 billion people. Once we perform this gateway function well, connect with the Belt and Road Initiative, and make good use of the functions of the Guangdong-Hong Kong-Macao Greater Bay Area, I believe Hong Kong has a unique position in developing Web3, with very great opportunities.